By: Carlee Gettman
At the beginning of 2020 the fashion industry was set to have another successful year. Advancements in online shopping, seasonal outfits and next-day shipping were proving to be very beneficial for the industry. It was not until the abrupt nationwide shutdown from the COVID-19 pandemic that many manufacturers experienced a massive decline in demand for products, thus bracing for the financial consequences to come.
The nation going into a government-ordered shutdown left people unsure of the future, and many went to extremes such as doomsday prepping. With this ubiquitous fear and conservation, the last thing people were thinking about was a new outfit. As stores were forced to close their doors indefinitely, they hoped online shopping would keep their heads above water. With nowhere to go, consumers online shopping greatly declined.
Fashion companies had to think quickly to maintain operations. Many of these companies resorted to promoting and producing at-home fashion, in hopes that sweats and pajamas could dominate the industry. For some, this kept revenue flowing, but for many this last-resort effort proved dissatisfying for buyers and business.
Those that placed online orders were met with lengthy delays in shipping and production. Countries were cracking down on what arrived and departed from their region and some faced major quarantines, this caused month long setbacks for customers waiting to receive their orders. The idea of next-day shipping was thrown out the window, and the anticipation these delays caused was threatening for fashion companies. Buying customers turned into angry customers, ultimately deciding it was not worth the wait. These delays resulted in more-and-more terminations for stores.
Business closures did not only impact sales, but thousands of individuals lost their jobs. With people out of work, Americans were scrambling to find methods of income. It was not as if people had endless options to find new work, and almost no one was looking to hire. People had to shift their focus and spending away from luxury items and onto survival. This unquestionably excluded spending on fashion and clothing for many.
Retailers such as American Eagle Outfitters, Chicos, Estée Lauder, Gap, Guess? Inc., H&M and JCPenney were left with no other option but to permanently close hundreds of stores and even file for bankruptcy.
In September 2020, American Eagle Outfitters announced the closure of 40 to 50 department stores this year and up to 500 stores in the next two years. As of Aug. 1, total revenue fell out of the billions and into the millions. While this may sound like a small-scale loss, the impacts it made were far from minuscule. To save the company, closures were unavoidable.
Following in the footsteps of chain closures was the 118-year-old department store, JCPenney. In May 2020, JCPenney filed for bankruptcy. At the time, the chain had more than 800 stores and 85,000 employees. Now those employees and stores are in limbo and left wondering where their next paycheck will come from.
Multiple U.S. states are starting to slowly ease lockdown restrictions and remain optimistic for a return to the old normal. Although, the irreversible economic impacts of COVID-19 will continue to unfold with time and the restoration of pre-pandemic operations are not in the near future.
These losses create opportunity for the fashion industry to reinvent themselves and devise a new normal. Online shopping could be the key for companies to resurface and change the idea of in-person shopping. Some of the greatest successes are built on failures, so these companies next moves are crucial.